Ali, an opposition leader who ran for president in 2012, faces a suspended jail term that was widely believed to hamper his ability to formally present his candidacy this year.

He received a three-month prison sentence for "offending public decency" after he allegedly made an obscene gesture during a protest.

Ali told local media, however, that the case "was fabricated because I plan on running for president".

His withdrawal from the race comes just hours after Sisi formally filed his candidacy papers with the national electoral body.

A former army chief, Sisi led a 2013 military coup against his democratically-elected predecessor, Mohamed Morsi, of the now-outlawed Muslim Brotherhood.

He was elected president a year later and is now seeking a second, four-year term in office.

Pressure on opposition

Critics say the Sisi government has exerted pressure on its political opponents, several of whom have withdrawn their campaigns for president in recent weeks.

On Tuesday, another potential challenger for the presidency, Sami Anan, was arrested by the army.

The Supreme Committee of the Armed Forces (SCAF) accused Anan, himself also the former head of the Egyptian armed forces, of forging documents and not seeking their approval before announcing his presidential campaign.

Hours after the arrest, Anan's camp said his campaign would be suspended "until further notice".

In a statement, Amnesty International said Anan's arrest "shows a blatant disregard for the rights to freedom of expression and association and the right to public participation.

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"It appears that Sami Anan has been detained because he was widely considered to be a serious contender against President Abdel Fattah al-Sisi," said Najia Bounaim, the group's North Africa campaigns director.

"This is not the first time such a contender has been prevented from running against the incumbent."

Presidential hopefuls have until January 29 to officially submit their candidacies.

To be eligible, a candidate must collect 25,000 signatures from constituents across 15 governorates in Egypt, or the signatures of 20 members of parliament.

If Sisi remains the only candidate in the race, the March vote will be a referendum.

Speaking to Al Jazeera on Tuesday, Omar Ashour, a professor at the Institute of Arab and Islamic Studies at the University of Exeter, said he expected a candidate "who is not that threatening" to go up against Sisi.

"Now we'll have to wait and see who will come up, probably somebody who does not have that much support on the ground and does not have any support in the military establishment," Ashour said.